HR outsourcing is the process of sub-contracting human resources functions to an external supplier.
Different HR functions that can be outsourced:
One can outsource various HR functions depending upon the expertise required. Recruitment is unarguably the most common functions outsourced. However, it is functions like payroll, leave tracking, record keeping, etc.
Recruitment: Outsourcing recruiting makes a lot of sense. The organization will always have the final say in the selection of the candidate, but the screening of resumes, and initial selections can be completely outsourced. Then there are also entrepreneurs who believe that recruitment should never be ...view middle of the document...
These service providers are specialists who bring in fresh perspectives, competent policies, and tried and tested process to manage employees. This saves a lot of time and effort of the management. This also helps in the management and standardization of HR processes.
HOW TO DECIDE:
There are a number of considerations that one should look at before deciding upon a service provider. Here are a few tips:
References: The information that these service providers deal with is sensitive and confidential in nature. People have entire employee master and performance management systems with their HR outsourcing firms. There is always an insecurity of important information spilling out. It’s important to hire a reliable firm through references. People who have already used a HR outsourcing firm are the best way to hire.
Experience in your domain: It is always better to hire a firm that has some experience in domain. That way they understand requirements better. Do not go for a firm that has immediate competitor as a client. There could be a conflict, because if the competitor is larger, then they would be more important for your HR outsourcing firm.
Similar size: It is also very important to select firms that are similar size. HR firms measure their performance by the number of people they can place in organization because that is how they get paid. So, if they are working with a large company where they can place 10 people, they earn 10 times the revenue compared to the one person they will place in a small organization. In that sense, the attention span small companies get is very limited.
WAYS OF OUTSOURCING:
There are many ways in which outsourcing human resources can be done
• Business process
• Shared service
• Application service
Business process outsourcing (BPO) is the contracting of a specific business task, such as payroll, to a third-party service provider. Usually, BPO is implemented as a cost-saving measure for tasks that a company requires but does not depend upon to maintain their position in the marketplace. BPO is often divided into two categories: back office outsourcing which includes internal business functions such as billing or purchasing, and front office outsourcing which includes customer-related services such as marketing or tech support.
BPO that is contracted outside a company's own country is sometimes called offshore outsourcing. BPO that is contracted to a company's neighbouring country is sometimes called nearshore outsourcing, and BPO that is contracted with the company's own county is sometimes called onshore outsourcing.
Companies of all sizes and levels of complexity, in virtually all industries and around the globe, have worked to improve the effectiveness and efficiency of their HR operations. More recently, they’ve combined outsourcing both broadly and selectively with ever-improving technology for customers and operators of HR services. These changes have...